PACIFIC BUSINESS NEWS - Nonprofit Leaders Reach for Resilience
PACIFIC BUSINESS NEWS - By Kelsey Kukaua
One Hawaii development director likens the current pandemic economy to riding in a canoe – we all have to put our heads down and paddle to make it through this.
“We must focus on our strengths, follow our best practices, and remain steady in pursuit of our mission so we can continue to do the work when we come out on the other side,” said Angela Britten, development director of nonprofit Hawaiian Islands Land Trust.
Britten, who is also the president the Association of Fundraising Professionals Aloha Chapter, said maintaining a strong foundation is the key to a resilient organization.
As government officials look to reopen the state’s economy, local nonprofits have stepped up to fill a need, especially in the areas of food insecurity and homelessness. For these safety-net health and social service providers deemed “essential”, in-kind donations have been up. But for most nonprofits, donations are flat or reduced and some have even had to furlough or lay off employees to stay afloat.
Hawaii’s nonprofits collectively employ 53,000 people, just over 11% of the state’s workforce, generating more than $8.24 billion in annual revenues, according to independentsector.org. They hold assets of nearly $25.43 billion and Hawaii foundations give out more than $94 million every year.
Pacific Business News asked local nonprofit leaders: What does the shutdown economy mean for organizations, boards, leadership, staff and beneficiaries?
Waiting and seeing
“Most have never experienced something like this before, so it’s very difficult for fundraisers to forecast what the end of the year might look like,” Britten said. “The mood has been waiting and seeing. One thing we can do is look back to other economic events like to the 2008/2009 recession.”
For Hawaiian Islands Land Trust, the nature conservancy nonprofit has already began modeling its budget for a possible 50% decrease in revenue for the year. It has considered alternative modes of funding including Hawaii Community Foundation’s resilience fund, donations from other foundations, and funding through the Coronavirus Aid, Relief and Economic Security, or CARES, Act. The nonprofit has also been approved for the U.S. Small Business Administration's Paycheck Protection Program loan, which will help cover costs for two months of payroll and rent and utilities.
The Hawaii Alliance of Nonprofits Organizations, whose mission is to strengthen the nonprofit sector, has been helping nonprofits apply for SBA loans, and many have had their applications already approved.
As of press day, the U.S. Senate passed a bill to extend the SBA’s disaster loan and grant programs, with the House expected to vote its approval on Thursday before President Donald Trump signs the bill.
“It is unclear how soon funding will become available or how soon the loan portals will be reopened,” HANO told nonprofits in an email newsletter. “If you plan on applying for a PPP or EIDL loan, you should get your paperwork in order now so you’re ready as soon as the programs reopen.”
“The application forms are traditionally geared to for-profit businesses, making it confusing and challenging for nonprofits to apply,” Lisa Maruyama, HANO president and CEO, told PBN. “Although some of the loans convert to forgiveness grants, a few of the relief options remain as loans. Although smaller nonprofits could really benefit from the loans, they are probably hesitant to take on debt, unsure of their future and their ability to pay the loans back.”
Maruyama noted that nonprofits rely primarily on four baskets of revenue that include government contracts with the counties, state, and federal government; individual private donors; philanthropic grants from private and corporate foundations; and for fee-for-service or membership fees.
In response to the pandemic, HANO has been in discussions with state and county government officials to ensure nonprofits are being paid on time for cost reimbursements. The organization has also acted as an information conduit, having posted a resource page on its website, while also working with the philanthropic community to focus its giving as well as with national organizations to push congress for the next CARES Act.
“It’s the perfect storm for nonprofits, especially those that are currently providing services – having to think about their own survival and financial status and continuing to provide traditional service and new pivoted Covid-19 services,” Maruyama said. “The smaller nonprofits might be able to pivot faster around governance and decision-making over those larger ones that are more structured like for-profit businesses.”
And even in the worst-case scenario, nonprofits have one advantage over, say, a restaurant that, if it closes, closes permanently. A nonprofit organization can retain its tax-exempt status while services slow down and rebuild later, according to Maruyama.
“The community is stepping forward in these times to problem solve and to meet missions in rapid ways,” she said. “We’ve seen hardships, but I’m proud to see nonprofits respond in this way. This crisis has given everyone the opportunity to act on its audacious goals and come up with creative solutions. Some nonprofits in the end may thrive if they are able to pivot to address those needs.”
Hawaiian Islands Land Trust, with an annual operating budget of just over $1 million, has had to cancel its programing, which has directly impacted its ability to fundraise since the majority of its revenue comes from individual donors.
“The first thing we did was call and email our donors to make sure they were doing okay – we wanted to be sensitive to what’s going on right now,” Britten said. “We’re all still doing the work of conservation stewardship, and remain dedicated to our land protection efforts.”
So far, the nonprofit has not had to lay off any of its 11-staff team. Britten said one of the worst things people did in the 2008 recession was cut their development staff. She advises that in this crisis, boards and executive directors maintain these positions as much as possible.
Development directors wear multiple hats, overseeing marketing and operations as well as events on top of fundraising for the organization.
“Our job is about relationships and matching a philanthropist with a philanthropic need,” Britten said. “I hope that when this subsides, people will come out with a better understanding of who they are and what’s important to them.”
With its statewide reach, Aloha United Way has increased its response to both coronavirus and economic concerns by funneling money to 315 nonprofit partners, expanding hours for its 2-1-1 hotline and launching a recovery fund to support a rent and utilities assistance program for eligible members of the community.
“When the crisis kicked off, we still had funds in our normal operating accounts to pay the nonprofit providers through June and pay our other expenses like payroll, internet service, phones,” said Norm Baker, Aloha United Way interim president and CEO.
“There were not adequate funds in these operating accounts to also set up the Covid Rent & Utility program, so we withdrew $1 million [from its $7 million in reserves] to initiate it and have received over $300,000 in donations from community partners Harold K. L. Castle Foundation, HEI Charitable Foundation, J. Watumull Fund, and American Savings Bank to support the program,” he added.
Baker said running a nonprofit is exactly like running a business – there’s no real difference besides filing out a different tax form at the end of the year.
“Nonprofit doesn’t mean non-payroll – meaning we have the same sort of expenses,” Baker said.
Goodwill Hawaii, one of the nonprofit recipients of Aloha United Way’s asset-limited, income-constrained, and employed, or ALICE, initiative, recently had to furlough 300 employees – more than half of its workforce – due to the government shutdown, although its programs continue to operate as an “essential” service to the public.
“We’re not unlike any other retailer,” said Katy Chen, Goodwill Hawaii co-president and CEO. “When the government shutdown happened, we had to shutter our stores. We anticipate, knowing the unemployment rate in Hawaii is among the highest in the country, our employment programs will become more critical in the community.”
Goodwill Hawaii has had discussions with Aloha United Way and its funders about how to best address the community needs now.
“Before we were focusing on people already working and looking to advance their livable wage, but now under the circumstances with such a high unemployment rate, the No. 1 need in the community is to get any job, so we’ve had to refocus our efforts on those that are unemployed and not just on those who were already working,” she said.
Due to the increase in 2-1-1 calls, Aloha United Way expanded its hours to include after-hours and weekends and also doubled up on staff. The calls went from about 300 a week to 3,800 in the first week the pandemic hit the Islands. Aloha United Way has a contract with the Department of Health that empowers them to use 211 as their primary call center, and in return, they pay any additional 2-1-1 costs.
Looking ahead
Aloha United Way funds its $17 million operations by two primary sources: more than half from its annual giving campaign and the remaining amount through grants.
But Baker said since the crisis hit, collections have slowed down as many of the pledges from its 2019 campaign will go unfulfilled this year¬. The organization has also had to delay this year’s campaign. “The reserves will be our basis,” Baker said. Some relief will also come from its approved SBA loan – which will help support the payroll of Aloha United Way’s 34-person staff – and other community donations.
As far as trends in giving, people are reverting to basic needs and are more inclined to help broadly wherever the greatest need is, according to Baker.
“If everyone in the community can say, ‘Hey I can get by on 75% of what I had,’ and we all survive, that’s better than a few of us taking no cuts at all and other people going homeless,” he said. “Let’s all share the pain equally and we’ll get through this.”
Baker advises that during trying times, it’s important to keep the board of directors informed and involved, keeping in mind they have a fiduciary responsibility to the nonprofit. Smaller nonprofits usually have a working board, so their role is to help the executive director get through the problem, Baker said.
Looking toward the future, Baker said its inevitable Hawaii may lose some nonprofits unable to survive the financial pressures due to the stay-at-home orders to slow the pandemic, while others with similar missions may merge together.
“The uncertainty we’re living with is disrupting to people, so I think we’re going to have mental health issues around this and there will be more of a need for this service,” he said.
To adjust to this disruption, Baker’s advice is to keep moving forward day-by-day, one foot in front of the other.
“This has delayed my retirement,” he laughed. “But there’s a need in the community that needs to be addressed, somebody needs to do it and I’ve got 15 years of experience doing this, so who better to be there. You just sort of say this is what was dealt with me I’m going to deal with it. But I will retire just as quick as I can when I’m done.”